Ethiopia Economic Outlook

November 13, 2018

Recent reports show that capital spending in April–July contracted sharply in annual terms, as the government tries to encourage private enterprise and reduce the role of the state in the economy. This translated into a narrower fiscal deficit, along with a decline in imports and a lower current account deficit, despite a sizable fall in exports—especially of agricultural products and gold. Meanwhile, there was more good news in the political arena. In mid-October, the government signed a peace deal with rebels in the oil-rich eastern region. Later in the month, parliament approved Sahle-Work Zewde to become the country’s first female president—a further sign of political openness from Prime Minister Abiy Ahmed.

Ethiopia Economic Growth

Growth should remain robust in FY 2018, although is likely to slow somewhat as the government restrains public investment growth to limit imports. That said, an improving business environment following market-friendly economic reforms could propel stronger activity in the private sector. Met the why particular panelists see the economy growing 8.2% in FY 2018, unchanged from last month’s forecast, and 7.6% in FY 2019.

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